Include age pension in plans: Towers Watson
Financial planners should be considering the age pension as part of their clients' financial risk model, according to Towers Watson Australian investment strategy head Tim Unger.
The pension's reasonably well-defined framework meant it could be included when working out the level of expected risk and return, he said.
It's possible that including the age pension in a risk calculation would encourage people to take more risk for longer than they would otherwise need, Unger said.
The modelling tools financial advisers are using are growing more sophisticated, allowing what was previously a complicated procedure of calculating the age pension according to multiple rules much easier, according to Unger.
"As those tools have become more sophisticated, people have started focusing on the post-retirement aspect of a member's life, so there has been a greater effort to allow for it," Unger said.
The pension can still be a meaningful part of their savings, so financial advisers who didn't take that in to account weren't considering a client's full retirement savings, he said.
Client data can also be used to build a risk/return profile as a whole image and over different time points, which can be overlaid on top of a financial risk model to get an idea of different risk profiles at different times for different members, he added.
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